9911796707
TMI Blog1984 (6) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... aning thereof in sections 309( 1 ) and 310 of the Companies Act even after the Central Govt. expresses its opinion affirmatively in terms of the proviso to section 309( 1 ) ?" Facts, abbreviated to the relevant minimum, are as below. The second petitioner, J.D. Masani, is a qualified advocate and solicitor and has been practising as such since about 1965. He joined M/s. N.C. Dalai Co., a firm of advocates and solicitors (hereinafter "the said firm"), as a partner and later from February, 1977, became its sole proprietor. This firm has been rendering professional services to the first petitioner, the Ruby Mills Ltd. (hereinafter "the company") for more than the last twenty-five years. In March, 1977, the second petitioner was appoint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lyarkhan, learned counsel for the petitioners, is that once an affirmative opinion is given by the Central Govt. under the proviso to section 309(1), the professional fees and charges payable to the second petitioner, Masani, as an advocate and solicitor would cease to be remuneration under the Companies Act and it was, thereafter, not open to attach to the said opinion, a condition such as the one impugned herein. The said condition was not legal and valid. Mr. Parkar, learned counsel for the respondents, seeks to support the impugned condition and asks for dismissal of this petition. Before proceeding further, sections 309(1) and 310 of the Companies Act, 1956 (hereinafter "the Act"). may be noted: "309(1). Remuneration of direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directors, shall not have any effect unless approved by the Central Government; and the amendment shall become void if, and in so far as, it is disapproved by that Government: Provided that the approval of the Central Government shall not be required where any such provision or any amendment thereof purports to increase, or has the effect of increasing, the amount of such remuneration only by way of a fee for each meeting of the board or a committee thereof attended by any such director and the amount of such fee after such increase does not exceed two hundred and fifty rupees". Though these two provisions read with section 198 of the Act take in their sweep the concept of "remuneration" in its various facets, the first proviso to sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition, however, nullifies the very purpose and raison d' etre of this opinion of the Central Govt. and renders it bereft of any practical utility. If a director renders professional services not as a director but as a qualified professional, such professional services would be de hors his directorship and de hors his directorial or managerial services. Section 314 of the Act does contemplate discharge, albeit by a director, of functions other than directorial or managerial in character. And if his qualified professional capacity is firstly duly certified by the Central Govt. by its affirmative opinion in terms of the proviso to s 309(1), the professional fees and charges payable to him as a qualified professional would then stand ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 310 of the Act. There is a vital difference between the stage prior to the Central Govt's. affirmative opinion supra and the stage thereafter. The fulfillment of the conditions attracting the legislative exception embodied in the proviso to section 309 frees the company as also the concerned qualified professional (who is also a director of such company) from the statutory control over managerial remuneration or remuneration by virtue of sections 198,309 and 310 of the Act. Besides, as observed by Chagla C.J., in Ramaben Thanawala v. Jyoti Ltd. [1957] 27 Comp. Cas. 105 , 110 (Bom.): ".......it is difficult to understand why a company should employ a technical expert and pay him whatever amount it thinks proper and there should be no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect. It is not the object of the Companies Act to regulate and control the practice or the fees of qualified professionals. That jurisdiction vests elsewhere. And, what is more, but for the conditional legislative exception under the proviso to section 309(1) which, on compliance, exempts professional fees and charges from "remuneration", the restriction de hors the said proviso may well become unreasonable and absolute in its effect and consequently render itself vulnerable to a constitutional challenge as violating one's fundamental right to practice his profession merely on becoming a company director simpliciter. It may, however, be observed that the position is not likely to be the same and would perhaps be different in the case of man ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
